Rupee opened lower, Dollar higher vs. major currencies

Tuesday,   23-Oct-2018   09:07 AM (IST)

The Indian rupee opened the day lower at 73.70/71 levels compared to its previous close at 73.5550/5650 levels in wake of selloff in Asian equities. India government bonds lower in early trade tracking fall in rupee and ahead of INR96 billion state debt supply. Benchmark indices opened lower on weak rupee following drop in Asian markets. At 9:30 AM, the S&P BSE Sensex was trading at 33,893, down 242 points while the broader Nifty50 was ruling at 10,167, down 78 points. As per the technical indicators range for the USDINR pair may be 73.50-74.00 levels. Rupee has an immediate support at 73.87 levels. A breach of the same may see rupee at 74.05 followed by 74.17 levels. On the positive side rupee is likely to face resistance at 73.56 levels and if it is able to break the same then it may gain up to 73.45 levels followed by 73.20 levels.

The dollar gained against its major peers on Tuesday, reining as the preferred safe haven currency as uncertainty over Brexit negotiations and Italy's free spending budget spooked investors away from the euro and sterling. British Prime Minister Theresa May on Monday said most of the country's deal to exit the EU has been agreed on but repeated her opposition to a EU proposal regarding the Irish border, according to excerpts from her statement to Parliament. With just over five months until Britain is scheduled to exit the EU, talks have stalled over a disagreement on the so-called Northern Irish "backstop," an insurance policy to ensure there will be no return to a hard border on the island of Ireland if a future trading relationship is not agreed upon in time. The sterling traded flat at $1.2965 on Tuesday, after losing 0.83 percent of its value on Monday, its steepest fall in percentage terms since Sept. 21. The pound has lost 2.2 percent versus the greenback in the last seven trading sessions. Italy also dominated euro price action with the single currency failing to find relief despite the fall in Italian 10-year bond yields on Monday. The benchmark Italian 1-year yield declined by 3 percent on Monday, its steepest fall in percentage terms since Oct. 3. Investors expect further political uncertainty in Europe over Italy's spending plans. Moody's, a rating agency, downgraded the Italian credit on Friday but surprisingly kept the outlook stable. The euro changed hands at $1.1460 on Tuesday, trading marginally lower versus the greenback. This risk-off sentiment may bode well for the dollar in the coming days. The greenback has also made gains against the Japanese yen. The yen has weakened against the dollar in the four of the past five trading sessions. It traded at 112.71 to the dollar on Tuesday, slightly below its 8-day low of 112.88 hit on Monday.